Structural Change in a Multi-Sector Model of Growth

Ngai, Rachel; Pissarides, Christopher A.

Purchase - $8 CEPR Subscribers Download

Add Paper to My Library

Structural Change in a Multi-Sector Model of Growth

45 Pages Posted: 15 Feb 2005

See all articles by Rachel Ngai

Rachel Ngai

London School of Economics & Political Science (LSE) - Department of Economics; HKUST Business School

Christopher A. Pissarides

London School of Economics & Political Science (LSE); Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics; Hong Kong University of Science & Technology (HKUST)

There are 2 versions of this paper

Date Written: November 2004

Abstract

We study a multi-sector model of growth with differences in TFP growth rates across sectors and derive sufficient conditions for the coexistence of structural change, characterized by sectoral labor reallocation, and constant aggregate growth path. The conditions are weak restrictions on the utility and production functions commonly applied by macroeconomists. We present evidence from US two-digit industries that is consistent with our predictions about structural change and successfully calibrate the historical shift from agriculture to manufacturing and services. We show quantitatively that reasonable deviations from our conditions do not have a big impact on the properties of the model.

Keywords: Structural change, unbalanced growth, multi-sector growth, sectoral employment

JEL Classification: O14, O41

Suggested Citation: Suggested Citation

Ngai, Liwa Rachel and Pissarides, Christopher, Structural Change in a Multi-Sector Model of Growth (November 2004). Available at SSRN: https://ssrn.com/abstract=664604